Dividend stocks can be excellent long-term investments. Over the last 50 years, the average dividend stock has outperformed the equal-weighed S&P 500 index, with the best total returns coming from dividend growers.
REITs tend to be great dividend growth stocks. Agree Realty (NYSE: ADC), Rexford Industrial Realty (NYSE: REXR), and Invitation Homes (NYSE: INVH) are among the many REITs with excellent records of steadily increasing their dividends. That makes them no-brainer buys for those who have a little bit of cash to put to work right now.
Stability pays dividends
Agree Realty has increased its dividend at a 5.6% compound annual rate over the past decade. The retail REIT currently pays a monthly dividend that yields nearly 5%, several times above the S&P 500’s 1.3% dividend yield. To put that into perspective, an investor can generate nearly $5 of annual dividend income for every $100 they invest into the REIT. That compares with a little over $1 in annual dividend income from an S&P 500 index fund.
The REIT owns properties net leased or ground leased to financially strong retailers. Those lease structures provide it with very stable cash flow. It typically pays out less than 75% in dividends. That provides it with a healthy cushion that it can use to reinvest into additional income-generating properties.
Agree Realty typically buys properties from existing retail partners in sale-leaseback transactions. It also provides funding to develop new properties. Its partners currently own over 165,000 properties, giving the REIT, which owns about 2,200 locations, a long growth runway.
Focus pays dividends
Rexford Industrial Realty is an industrial REIT focused exclusively on the Southern California logistics market. It owns more than 400 properties in a region with tight supply and high demand. That keeps vacancy rates low while driving strong rent growth.
The REIT’s focused strategy has paid big dividends. It has grown its earnings at a 15% compound annual rate over the past five years, driven by rent growth, acquisitions, and repositioning and redevelopment…
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